1. As more questions continue to mount about the fate of the #Adani FPO, here is a THREAD on the LIC’s participation in it.
2. By its own admission the LIC management today made an unprecedented announcement “clarifying” its investment role in the controversial and sagging FPO.
3. Even more unprecedented is its blatant defence of a private company, even if one of India’s largest. This defence, mounted on the pretext that its inv in the Group are safe, in the immediate context of the collapse of Adani stocks, appears to justify its continued role.
4. Happenings in the market tomorrow will determine the fate of the Adani FPO, but given that the Adani Enterprise share price at today’s closing was more than 20% lower than the price at the announcement of FPO in mid-Jan, indicates great uncertainty.
5. The Adani scrip closed at Rs 2893 apiece today - 7 per cent lower than the base price set for the FPO. In fact, given the extreme volatility, at its ,lowest point today it was 14 % lower than the base price.
6. The LIC statement misses the point that as an anchor investor LIC was allotted 9.16 lakh shares for which it paid at the rate of Rs. 3276 apiece. In a matter of mere days the LIC has thus seen the value evaporate to the extent of almost 12%.
7. LIC’s participation as an anchor investor, even after the #Hindenburg revelations of Jan 24, raises more questions about its longstanding role as a trustee of millions of policyholders who have invested lakhs of crores of rupees in making it among the world's largest entities
8. The alacrity with which LIC has reacted today raises even more disturbing questions, given the cloud that hangs over the fate of the Adani FPO which closes tomorrow.
9. One of the ways in which the FPO may possibly be salvaged tomorrow even if the price does not rally significantly is if institutional investors, particularly domestic ones, give the FPO the kiss of life, making up for what retail investors may not buy.
10. And, what Indian institution can be bigger than the LIC among domestic investors? The LIC management’s “clarification” today thus raises doubts about what role it may play tomorrow in one of India’s biggest FPOs in recent years as it comes to a close tomorrow.
11. The LIC management’s pious claim that its investments in the Adani Group companies is only a small fraction of its total investments is not even too clever by half, for the simple reason that LIC has always had stringent norms governing its portfolio.
12. The LIC management has claimed that it is impervious to volatility because it is a longterm investor. But shouldn’t a long term investor wait for extreme volatility to recede before deciding to participate in such a risky investment of funds that belongs to millions?
13.Can a reckless investment, even if only small, justify throwing policyholders funds in an instrument that the market itself is seriously in doubt of? (END)
@threadreaderapp pl unroll
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